Lilis Energy Announces Significant Balance Sheet Recapitalization
05 March 2019 - 10:00PM
Significantly Reduces Leverage and
Improves Liquidity Position Increases Borrowing
Base to $125MMReduces Fully Diluted Share Count by
Approximately 12MM
Lilis Energy, Inc. (NYSE American: LLEX), an exploration and
development company operating in the Permian Basin of West Texas
and Southeastern New Mexico, announced that the Company has entered
into definitive agreements for a transformational recapitalization
of its balance sheet. In the transaction, which is expected
to close later today, the Company will exchange its outstanding
Second Lien Term Loan for a combination of preferred and common
stock. Concurrent with the exchange and the regularly
scheduled spring redetermination, Lilis increased the borrowing
base under its revolving credit facility to $125MM. The
Company has provided a presentation detailing the transaction on
its website.
Ronald D. Ormand, Chairman and Chief Executive
Officer, commented, “This transformative transaction, extinguishing
the remainder of our Second Lien Term Loan, significantly reduces
our leverage profile, simplifies our capital structure, and, in
conjunction with our borrowing base increase, improves the
liquidity of the Company. The transaction also removes all
conversion features associated with the Second Lien, the Series C
and Series D preferred stock and reduces the fully diluted share
count by approximately 12MM shares. This transaction
importantly removes any concerns over leverage and near-term debt
maturities and allows both investors and the Company to focus on
the continued, efficient development of our high-quality
assets. The Company will have greater operational and
financial flexibility to allow us to manage our return on capital
and better match our capex program with cash flows and commodity
prices. As a result, we will continue to move towards cash
flow neutrality in the second half of 2019.”
Transaction Highlights:
Significantly Reduces Leverage and
Common Stock Dilution
- The exchange of Second Lien Term Loan for preferred and common
stock dramatically reduces leverage
- Leverage reduced to ~2x – proforma 2019
- Decreases fully diluted share count by approximately 12MM
shares
Substantially Improves Liquidity and
Cash Flow
- Increases borrowing base by approximately 16% to $125MM with
room for future growth
- All preferred securities have PIK options, eliminating any
near-term cash service
- Cash-flow neutral development program for 2019 should enhance
liquidity and maintain lower leverage ratios
Eliminates 2021 Maturity and Impact of
Future Conversions
- Transaction eliminates the 2021 Second Lien maturity and
extends RBL maturity to 2023
- No scheduled principal repayments required until 2023
- Eliminates conversion features associated with Second Lien,
Series C and Series D preferred stock and reduces Series C
redemption premium
- Simplifies the capital structure
Transaction Summary
Second Lien claim balance of
approximately $133.6MM exchanged for:
- $60.0MM Series E Convertible Perpetual Preferred
Stock- 8.25% PIK interest; toggles to cash pay or increased
PIK rate (9.25%) in 2021 at the option of the
Company- $2.50/share Conversion Price- Optional
redemption • Ability to redeem when common stock
trades at or above 150% of conversion price ($3.75)
• Optional redemption premium: Yr1 - 10%, Yr2 – 5%, 0%
thereafter • No redemption premium for a
redemption in connection with a Change of Control
- $55.0MM Series F Non-Convertible Perpetual Preferred
Stock- 9.0% PIK interest; toggles to cash pay or increased PIK
rate (10.00%) in 2021 at the option of the Company- Optional
redemption premium of 15% at anytime
- Approximately $18.6MM balance paid in common stock at closing
(approximately 9.9MM shares)
Extinguishment of Series C and D
preferred conversion features and voting rights:
- Extinguishment of all conversion features linked to Second
Lien, Series C, and Series D preferred stock offset by issuance of
new common shares and Series E dilutives- Fully diluted share
count decreases by 9%, approximately 12MM
- 7.75MM new common shares issued in exchange for the
extinguishment of convertible features (and associated voting
rights) of the existing Series C and D Preferred Stock
- Series C redemption premium capped at 25%, resulting in
potential savings up to $8MM
Increased Borrowing Base to
$125MM:
- Concurrent with the exchange and the regularly scheduled spring
redetermination, Lilis increased its borrowing base to $125MM
The credit facility is led by BMO Capital
Markets Corp. and SunTrust Robinson Humphrey, Inc., as Joint Lead
Arrangers; BMO Harris Bank, N.A. as Administrative Agent; SunTrust
Bank as Syndication Agent; Capital One, N.A. as Documentation
Agent, and Credit Suisse AG.
Conference Call:
Management will host a conference call on
Friday, March 8, 2019 at 11:00 AM Eastern Time to review financial
results and provide an update on corporate developments.
Following management’s formal remarks, there will be a
question and answer session.
Participants are asked to preregister for the
call through the following link: http://dpregister.com/10129253.
Please note that registered participants will receive their
dial in number upon registration and will dial directly into the
call without delay. Those without internet access or who are
unable to pre-register may dial in by calling: 1-866-777-2509
(domestic), 1-412-317-5413 (international). All callers should dial
in approximately 10 minutes prior to the scheduled start time and
ask to be joined into the Lilis Energy Inc. call. The
conference call will also be available through a live webcast,
which can be accessed via the following
link:https://services.choruscall.com/links/llex190308.html, which
is also available through the company’s website at:
http://investors.lilisenergy.com/events-presentations. A
webcast replay of the call will be available approximately one hour
after the end of the call through June 8, 2019. The replay
can be accessed through the above links.
About Lilis Energy, Inc.
Lilis Energy, Inc. is a Houston-based
independent oil and gas exploration and production company that
operates in the Permian’s Delaware Basin, considered amongst the
leading resource plays in North America. Lilis’ current total
net acreage in the Permian Basin is over 20,000 acres. Lilis
Energy's near-term focus is to grow current reserves and production
and pursue strategic acquisitions in its core areas. For more
information, please visit
www.lilisenergy.com.Forward-Looking
Statements:
This press release contains forward-looking
statements within the meaning of the federal securities laws.
Such statements are subject to a number of assumptions, risks
and uncertainties, many of which are beyond the control of the
Company. These risks include, but are not limited to, our
ability to replicate the results described in this release for
future wells; the ability to finance our continued exploration,
drilling operations and working capital needs; all the other
uncertainties, costs and risks involved in exploration and
development activities; and the other risks identified in the
Company’s Annual Report on Form 10-K and its other filings with the
Securities and Exchange Commission. Investors are cautioned
that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from
those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the
date hereof, and the Company does not undertake any obligation to
update the forward-looking statements as a result of new
information, future events or otherwise. Forward-looking statements
regarding expected production levels are based upon our estimates
of the successful completion of drilled wells on schedule.
Actual sales production rates from our wells can vary considerably
from tested initial production (IP) rates and are subject to
natural decline rates over the life of the well.
Contact:Wobbe PloegsmaV.P. Capital Markets
& Investor Relations210-999-5400, ext. 31
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